NEW YORK, April 17 Proxy advisory firm ISS said
on Wednesday that MetroPCS Communications Inc
shareholders should vote in favor of the wireless service
provider's merger with T-Mobile USA because the proposed terms
of the deal were sweetened.
T-Mobile USA's parent company, Deutsche Telekom AG
, improved its offer on April 10 by reducing the
proposed debt load of the combined company following complaints
from activist shareholders and advisory firms ISS and Glass
ISS, the biggest U.S. proxy advisory firm, recommended that
MetroPCS shareholders vote against the original proposal, but
now says the smaller debt load and other changes make the offer
much more attractive to shareholders.
ISS's report came the day after smaller proxy advisory firm
Glass Lewis gave its blessing to the deal.
If the offer is approved by shareholders at a special
meeting scheduled for April 24, MetroPCS shareholders would
receive $4.06 per share in cash plus stock equivalent to 26
percent of the combined company. Deutsche Telekom will own the
To placate MetroPCS shareholders, the German operator said
it would cut proposed intercompany debt by $3.8 billion to $11.2
billion and cut interest on the debt by 50 basis points for the
In addition, the revised offer extends the lockup period
during which Deutsche Telekom is prohibited from publicly
selling shares in the combined company to 18 months from the
The improved terms "have enhanced the economic value PCS
shareholders will receive in this merger," ISS said in its
Activists Paulson & Co and P. Schoenfeld Asset Management
(PSAM), which previously complained about the debt load, both
said they plan to vote for the new offer, subject to review.
PSAM said it would withdraw its proxy fight against the
Previously, only Madison Dearborn Partners, the
second-largest shareholder, and smaller advisory firm Egan
Jones, had publicly backed the deal.